New Yorkers Advised To Brace Themselves For Auto, Home Insurance Rate Hikes

New York City, NY (AHN) - While the average American family overpaid $870 for car and home insurance for the past for years, New Yorkers overpaid more because premiums have been higher in the Big Apple, according to a report by the Consumer Federation of America.

In 2005, New Yorkers forked over $850 annually for their home insurance, while the national average was $767. Rates went up higher in other coastal regions after Hurricanes Katrina and Rita hit the U.S.

The high premium occurred at a time when the insurance industry was making big bucks. In 2007, the industry earned $67 billion in profits, J. Robert Hunter, insurance director of the Consumer Federation of America, told Newsday.

In a letter to Hunter, Gerald Scattaglia, assistant bureau chief of New York's Insurance Department's Property Bureau, assured him the department "continually monitors profitability" of the industry, but maintained insurers' profit rates were low compared with other industries.

Scattaglia pointed out car insurance rates had been flat or even declined since 2003, while the industry lost approximately $30 billion a year to insurance fraud. He added more losses are expected this year as fraudulent claims rise, which is a typical occurrence when times are hard.

New York's auto insurance rates are the third highest in the U.S., after New Jersey and Washington, D.C. New Yorkers must brace themselves for a premium rise after four years of rates remaining relatively flat, state officials said.

Aside from high home insurance premiums, investment author Barbara K said in her New York Post column that new homeowners in New York must also spend 5 percent of their home purchase price on closing costs, which includes loan origination, loan discount, appraisal fees, credit report fee, title search and insurance fees, notary and recording fees, lender's inspection fee and home inspection fees.